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The ‘Nuisance’ of an Oil Spill and the Issue of Limitation

On 27 January 2021, the Court of Appeal handed down the latest judgment in the high-profile case of Harrison Jalla and others -v- Shell International Trading and Shipping Company (STASCO) and Shell Nigeria Exploration and Production Company Limited (SNEPCO).[1] The appeal was pursued by the Claimants.

The issue referred to the Court of Appeal concerned jurisdiction and limitation in the context of common law nuisance; with the date upon which the Claimants first accrued their cause of action, and whether it was a ‘continuing’ or ‘one off’ nuisance, hotly contested between the parties. As set out in this article, the question of limitation has direct bearing on establishing jurisdiction and a UK nexus for the claim.

The judgment handed down by the Court of Appeal provides clarification of the distinction between a ‘one off’ and ‘continuing nuisance’ and the consequent impact on limitation.

Background

The Claimants comprise 27,800 individuals and 457 communities based along a stretch of Nigerian coastline. Lying approximately 120km off the coast is the Bonga oil field where oil is extracted from the seabed via a Floating Production Storage and Offloading facility (FPSO). It is then pumped from the FPSO through flexible flowlines to a Single Point Mooring buoy (SPM), before being transferred onto tankers and vessels.

On 19/20 December 2011, the MV Northia was moored at the SPM to load just under 1 million barrels of crude oil from the FPSO. The Claimants allege that during this procedure, an oil spillage occurred over a period of 5-6 hours. Within weeks, oil washed up on the Nigerian coastline. The Claimants allege that the oil had a devastating impact on their fishing, farming, drinking water, mangroves, religious sites, land value and associated industry.

Overlapping Issues of Limitation and Jurisdiction

For the purposes of the common law nuisance cause of action, the limitation period is 6 years (subject to expert evidence).

With only 1 week to go before the sixth anniversary of the spill, proceedings were first issued on 13 December 2017 (against Nigerian entity SNEPCO and two other companies from the Shell group who have since been removed from the proceedings.

In April 2018, two years after the proceedings were initiated, the Claimants sought to bring an additional claim against UK company STASCO relating to its management of MV Northia. SNEPCO were the operator of the offloading facility over which STASCO had disputed levels of control. This additional claim against STASCO was held to have not been commenced until 2 March 2020 (the date of the judgment determining the application to add the claim).

In the course of proceedings, there has been detailed discussion of when the cause of action accrued with reference to the issue of exactly when the oil reached various parts of the Nigerian coastline and impacted local communities. Broadly, at first instance, it was held that many (but not all) of the Claimants were affected before April 2012, i.e. more than 6 years before STASCO were joined to the proceedings with the remaining claimants affected between April 2012 and mid to late 2013. On that basis, the claim relating to the management of MV Northia by the ‘UK anchor’ defendant STASCO, which was deemed to have been commenced on 2 March 2020, would therefore be out of time.

The issue on appeal: continuing nuisance or ‘one off’ nuisance?

At first instance[2], in order to retain the UK jurisdictional nexus against STASCO, and avoid a limitation defence, the Claimants had argued that their claim was on the basis of ‘continuing nuisance’ so long as the oil remained on their land. On that analysis, the ‘limitation clock’ on the claim would not begin to tick until the oil, the cause of nuisance, was cleaned up. At first instance, Stuart-Smith J (as he then was) concluded, “that this single spill gave rise to a one-off claim in nuisance which crystallised within weeks rather than months of 20 December 2011. He found that the appellants’ claims were not, and could not be, claims for continuing nuisance.” This was the issue under appeal.

The judgment

The Court of Appeal first considered what constitutes a case of continuing nuisance. It was noted, that “a cause of action in tort is usually a single, self-contained package of rights, relating to an act or omission which has caused damage and is actionable in law. Thus any claim in negligence in this case, arising out of the event when the oil leaked into the sea on 20 December 2011, gave rise to a single cause of action, which, as a matter of law, was completed when damage occurred.” In contrast, a continuing cause of action is “a cause of action which arises from the repetition of acts or omissions of the same kind as that for which the action was brought.”[3]

The Court in the present appeal concluded that the spill, “was a single, one-off event giving rise to a single, one-off cause of action”. The Delaware Mansions[4] case which concerned ongoing encroachment of tree roots under a neighboring property was considered. There, the original owners had a claim in nuisance, and it was held that new owners also had a similar claim on the basis that the nuisance was continuing. The Court distinguished Delaware from the present case on the basis that there was a “continuing state of affairs – the nuisance – created by the tree roots” whereas here, “there was no continuing state of affairs: instead, there was a one-off event which, if it was a nuisance, was abated within a few hours. The oil that remained on the appellants’ land was the consequence of that single event.”

The Court considered that the Claimants attempt to argue that the continued presence of the oil was a “continued state of affairs” represented an equation of nuisance with the damage or harm it caused. The Court’s view was that, “There is no authority which supports the contention that, in a case like this, there is a fresh cause of action every day that the oil remained on the land. It would be a radical departure from the case law to say that a continuing nuisance does not require a continuing event or hazard, but merely continuing harm after the single event has ended, or the hazard has been removed.” The Court was further concerned that to find otherwise might imply that physical damage is a required ingredient of the nuisance cause of action.[5]

The Court did not accept the Claimants’ submissions that any nuisance continued until a clean-up was completed. It was noted that, “abatement of the nuisance means dealing with the state of affairs that created the nuisance; it does not involve any obligation to remediate the damage caused by the nuisance.” The Court particularly noted that it was within the Defendants’ control to stop the pipe leaking oil into the sea but could not control what happened once the oil was in the sea (notwithstanding that they may be liable for the consequences of this).

The Court concluded that the Claimants pleadings suggested, “a devastating single event, which had a terminal effect on fishing, fish trading, farmland, drinking water, mangrove swamps and other features of the land” and did not support the view that there is a continuing claim.

Comments

On this basis, the Court rejected the appeal and concluded, “this is not in law a case of continuing nuisance. The judge was right to find that the cause of action accrued to the appellants when the oil first struck their land, which is why many of the claims are likely to be statute-barred.

The Court was plainly concerned about the policy effects of finding otherwise, noting that, “It would mean that from a one-off oil leak, companies like STASCO and SNEPCO could be faced with litigation fifty years later. They would be unable to identify their future liabilities with any certainty. The provisions of the Limitation Act would be rendered ineffective.

As evidenced by this case, devastating environmental disasters – such as oil spills – present myriad practical challenges and complex questions of fact (including what happened, where responsibility truly lies, and who is the appropriate defendant) that can take time, and significant skill and resource, to investigate. In addition, as per Jalla, complying with limitation requirements, whilst establishing an appropriate jurisdictional nexus, can pose significant challenges for Claimant legal teams.

Yet, just weeks after the judgment in Jalla, on Friday 12 February, the Supreme Court decision in Okpabi and others (Appellants) v Royal Dutch Shell Plc, is a welcome reminder that challenging cases can and will be won: The Okpabi judgment is likely to provide significant assistance to other Claimants seeking to hold multinational defendants, acting through off-shore subsidiaries, to account.

Footnotes

[1] [2021] EWCA Civ 63

[2] [2020] EWHC 459 (TCC)

[3] Hull v Chard Union [1894] 1 Ch 293

[4] Delaware Mansions Ltd v Westminster City Council [2002] 1 AC 321

[5] Which is, “at least open to debate” following Williams v Network Rail Infrastructure Limited [2018] EWCA Civ 1514; [2019] QB 601

Related Lawyers: Stuart Warmington, Sarah Moore
Related Practice Areas: Human Rights and Environmental Disputes

Related Lawyers